Mr. Chairman and Members of the Subcommittee:

Thank you for inviting the Disabled American Veterans (DAV) to testify at this important oversight hearing of the Subcommittee on Health.  DAV is an organization of 1.2 million service-disabled veterans, and devotes its energies to rebuilding the lives of disabled veterans and their families.

The DAV appreciates your leadership in enhancing Department of Veterans Affairs (VA) health care programs on which many service-connected disabled veterans must rely.  At the Subcommittee’s request, the DAV is pleased to present our views on the VA’s Health care Effectiveness through Resource Optimization (HERO) project.  This demonstration project was directed to be carried out by the Conference Report on VA’s fiscal year (FY) 2006 appropriation, Public Law 109-114.  Congress deemed it essential that care purchased from private sector providers for enrollees of the VA health care system be secured in a cost effective manner, in a way that complements the larger Veterans Health Administration (VHA) system of care, and preserves important agency interest, such as sustaining a partnership with academic affiliates.

As this Subcommittee is aware, the Department revamped the Project HERO solicitation from its original form and later awarded a contract in October 2007 to Humana Veterans Healthcare Services (HVHS), a national managed care corporation that was a major fiscal intermediary and private network manager under the Department of Defense (DoD) TRICARE program.  In January 2008, contract services for dental care were to be made available through Delta Dental.  Under this demonstration, participating Veterans Integrated Service Networks (VISNs) are to provide primary care and, when circumstances warrant, must authorize referrals to HVHS for specialized services in the community.  These specialty services initially included medical/surgical, diagnostics, mental health, dialysis, and dental. 

VA indicated VISNs 8, 16, 20 and 23 were selected as they had the highest expenditures for community-based care, particularly relative to the number of enrollees in the VISN.  In addition, these VISNs are some of the larger VA networks, together representing 25 percent of total enrollment and 30 percent of annual out of network expenditures.  These selection factors were used to ensure the demonstration results are representative of the larger VA population and to facilitate measurement of proof of concept under Project HERO.  Contracts for this demonstration project have a base year and four option years.  Having recently exercised the second one-year option, the demonstration project is now on its third year.

DAV believes Project HERO is timely considering the escalating rise in spending for non-VA purchased care and the manner by which such care is managed.  According to VA, total expenditure for VHA Fee Basis programs in FY 2007 was $2.227 billion.[1]  VA spent approximately $3 billion in FY 2008 in non-VA purchased care and estimates it will spend $3.8 billion for FY 2009.[2]  Despite the growth of the program, well known weaknesses in VA’s fee-based care program remain and have been subject to criticism by the veteran community,[3] VAOIG,[4] and the GAO.[5],[6]  For example, VA does not track fee-based care, its related costs, outcomes, access, or veteran satisfaction levels.[7],[8]  Also, unlike the contract’s medical reimbursement prices under Project HERO, VA’s fee-based care program is highly decentralized, lacks sufficient guidance, and subsequently suffers from wide variation in reimbursement prices for both facility and professional charges. 

Mr. Chairman, we mention this because in testimony before the Senate Committee on Veterans’ Affairs on September 30, 2009, VA has begun to compare Project HERO to fee-based care.[9]  Our concern here is that VA’s fee-basis care program sets such a low bar that a comparison to any other non-VA purchased care program would excel almost by default.  We believe the objectives outlined by Congress address similar concerns DAV has that VA has no systematic process for contracted care services to ensure that:

• care is safely delivered by certified, licensed, credentialed providers;
• continuity of care is sufficiently monitored, and that patients are properly directed back to the VA health care system following private care;
• veterans’ medical records accurately reflect the care provided and the associated pharmaceutical, laboratory, radiology and other key information relevant to the episode(s) of care; and
• the care received is consistent with a continuum of VA care.

If Project HERO is to achieve all of the above, the result could offer our nation’s veterans a truly integrated, seamless health care delivery system, improved veteran satisfaction, and optimized workload for VA facilities and their academic affiliates while cost for non-VA care is reduced.  For the hearing today, we wish to share with you key features of Project HERO that DAV believes are important for your consideration.

Patient Safety and Quality of Care

Mr. Chairman, the reality of veterans who are enrolled in the VA health care system and receive care purchased by VA is that they lose many safeguards built into the Department’s system through its evidence-based medicine, electronic medical records, and bar code medication administration.  VHA’s health-care quality improvements over more than a decade have been lauded by many independent and outside observers, including the Institute of Medicine of the National Academy of Sciences, the Joint Commission on Accreditation of Healthcare Organizations (JCAHO), the National Quality Forum, and the Agency for Health Care Quality and Research (AHRQ) of the Department of Health and Human Services.  In addition, VHA emphasizes a culture of safety by allocating resources toward establishment of special centers, enhancing employee education on patient safety, and providing incentives to promote safety.  Its voluntary adverse event reporting system allows the reporter to remain anonymous and VHA’s patient safety initiatives and reporting on systems issues associated with adverse events are used to improve its own patient safety programs. 

These unique features culminate in the highest quality care available, public or private.  Loss of these safeguards, which are generally not available in private sector systems, would equate to diminished oversight and coordination of care, and, ultimately, may result in lower quality of care for those who deserve it most.

Having communicated these concerns to VHA since the early stages of developing the concept of this demonstration project, VA has continually assured the veteran community that the quality of care provided through Project HERO would be equal to or better than the care provide directly by VA.   To follow such assurances, Project HERO contracts require HVHS and Delta Dental to meet VA’s patient safety and quality of care standards, which include:

• HVHS and Delta Dental providers must be credentialed;
• HVHS providers under Project HERO must practice in facilities accredited by JCAHO, or one of the following: the Commission on Accreditation of Rehabilitation Facilities, the Intersocietal Commission for the Accreditation of Vascular Laboratories, or the American Osteopathic Association.
• Establish a process for reporting patient safety, complaints, and satisfaction; and
• Utilize a peer review process within HVHS with VA participation for any such reported cases.

The DAV believes these standards as required by VHA are an important step in the right direction to acquire high quality health care from the private sector, and should be part of all non-VA purchased care.  However, if this demonstration project is to complement the VA health care system, patient safety and quality of care under Project HERO will continue to remain a concern of DAV until such time as it is determined that the required standards and processes listed above yield care that is in fact equal to or better than the care directly provided by VA. 

In addition to Patient Safety and Quality of Care, DAV has chosen to focus on specific domains regarding Project HERO: Patient Satisfaction, Access to Care (distance and timeliness), and Clinical Information Sharing.  We understand these areas are directly affected by workload, which we have included in the table below.  From January 2008 through May 2009, comparing Project HERO to fee-based care on the number of patients served and the number of services paid in each program, VISN 16 is the highest user of Project HERO services, followed by VISN 23, VISN 20, and VISN 8. 

Patient Satisfaction

Questions from VHA’s Survey of Healthcare Experiences of Patients (SHEP) are being used to determine patient satisfaction for Project HERO.  While HVHS providers received a 79 percent average rating from veterans who indicated the “overall quality of visit” was very good or excellent and Delta Dental providers received an 85 percent average rating, we would like to point out the low scores ranging from 54 to 61 percent among the four VISNs for the same survey question.  Interestingly, the trend for patient satisfaction scores for outpatient HVHS services have been increasing over FY 2009 as volume of authorized services has decreased (but the number of patients served has increased from about 6,000 to over 15,500 and the amount disbursed to HVHS roughly $5 million to $12 million).  Unfortunately, even though the volume of authorizations for Delta Dental services has been declining since the beginning of FY 2009 (veterans served rose from 2,286 to 3,303 and the amount disbursed from about $2.5 million to $4 million), the overall satisfaction for Delta Dental care has been declining.

When determining how satisfied patients were with regards to the location of HVHS, Delta Dental, and VA facilities, surveys indicate patients are overwhelmingly satisfied with the location of Delta Dental facilities when compared to VA and HVHS facilities in all four VISNs.  VISN 20 is the only region for which patients are more satisfied with the location of VA facilities versus HVHS.  However, as the table below indicates veteran satisfaction for contractor’s facility locations are comparable to VA across all four VISNs, the trend through May 2009 in rating the convenience of their locations has gone down.

It should be noted that, unlike SHEP, which is aimed at overall quality throughout the year in 12 VA service areas, including access to care, coordination of care, and courtesy, Project HERO patient satisfaction is based on only one episode of care.  The IBVSOs encourage VA to ensure such comparisons are indeed valid and to separate these comparisons for each of the four VISNs and by specific survey questions rather than the average. 

Access to Care

While it is an intensive exercise, VA is able to determine access to care by distance.  Moreover, VA is able to determine by survey a veteran patient’s satisfaction with travel time.  According to VA, Project HERO patients travel roughly the same distance (27.44 median miles) as patients under the Department’s fee-basis program (29.81 miles).  No data for travel to VA facilities has been provided.  For FY 2009 to date, 95 percent of respondents rated the convenience of the Delta Dental location as good, very good or excellent, 85 percent rated HVHS, and 88 percent rated VA facility locations similarly.  No data for patient satisfaction with travel to VA facilities has been provided.

Project HERO contract providers are also obligated to meet timeliness access-to-care standards that include appointment scheduling within five days, completing appointments within 30 days (once all information needed to authorize the care is provided by VA), and veteran patient office wait time of 20 minute or less.   Data for the latter standard is gathered by survey and results indicate both HVHS and Delta Dental continue to meet or exceed VA’s performance to see the patient once at the provider’s office within 20 minute or less.   Delta Dental’s compliance to provide care within 30 days has a median of 99.7 percent, whereas HVHS has 88.5 percent.  Unfortunately, we do not have information on the four VISNs’ own compliance for either VA provided care or other non-VA purchased care to compare the appointment scheduling within five days, completing appointments within 30 days, and veteran patient office wait time of 20 minute or less.

DAV appreciates VA’s concern over and actions taken regarding patients traveling farther for care under Project HERO than what is available for fee care.  We would like to highlight that under Project HERO, VA is now able to capture timeliness of care data that VA purchases from the private sector through Project HERO. 

Clinical Information Sharing

Contracts require clinical information sharing and timelines be adhered to for each episode of care.  HVHS and Delta Dental are to receive all necessary clinical information of the patient to complete the requested medical care from the authorizing VAMC.  HVHS and Delta Dental are to upload the patient’s clinical data, which includes digital images and/or scanned clinical notes and treatment plans for services rendered, to a secure server site.  The referring VAMC’s fee claims office downloads patient medical records from the secure server site, sends the clinical information to its Health Information Management Service (HIMS) and attaches these records to the consult in VA’s Computerized Patient Record System (CPRS). 

Clinical inpatient and outpatient data generated as a result of referral to HVHS and Delta Dental for authorized care is to be provided to the VAMC within 30 days of the appointment date or inpatient discharge date.  With 30 days for the appointment to be completed and 30 days to return the clinical information, this metric has a lag time of approximately 60 days.  HVHS radiology reports are to be electronically signed within 48 hours, and initial treatment plans from Delta Dental are to be submitted to VA for approval within 10 days. 

On average, HVHS compliance in FY 2009 for returning within 30 of “inpatient care” and “routine and diagnostic” clinical data had been 82 and 86 percent respectively.  The average HVHS compliance for returning “radiology reports” within 48 hours has been 89 percent.  Delta Dental had a 70 percent average compliance for FY 2009 for submitting initial treatment plans to VA within 10 days.  According to VA, submission of initial treatment plans is not a normal procedure for dental treatment in the community resulting in the consistently low compliance with this requirement.

While much work needs to be done to ensure contractors meet compliance standards, the efforts by all parties to make this a key performance measure in Project HERO should be commended.  All participating VA facilities have electronic clinical information sharing available with HVHS and Delta Dental – unheard of in other non-VA purchased care programs.  Moreover, HVHS is to have read-only access to VA CPRS by the end of January 2010.  DAV applauds VA for piloting a program to electronically share through a secure web site scanned radiological images performed by Delta Dental as well as piloting at limited sites read-only access to VA’s electronic health records by the contractors.  However, DAV believes electronic clinical information sharing is an important component to contract care coordination.  Since meeting these contract standards is one component to consider in exercising optional years beyond the current contract, we expect HVHS and Delta Dental to continue its upward trend to meet these targets and if not, VA should take appropriate action. 

Cost Analysis

Mr. Chairman, some concern have been raised about the “Value Added Fee” for additional administrative services performed by HVHS and Delta Dental.  These services include credentialed providers, accredited facilities, return of clinical information to VA, timely provider claims processing and transmission to VA for reimbursement, monitoring and reporting of access to care, appointment timeliness, patient safety and satisfaction, coordinated appointment-setting services and other patient advocate services.

The DAV believes these costs should be included in any cost analysis performed for Project HERO.  Indeed these may not be actual medical care per se; however, it is an inextricable part of the overall quality and coordination of care provided to veteran patients in this demonstration project.  VA has indicated its contract pricing is comparable to or lower than market rates; however, when factoring in the value-added fee per claim, aggregate price exceeds market rates.  Moreover, while we have limited information about VA’s claims auditing procedures, but appears in need of refinement to minimize the risk of overpayments.  Thus, our fear remains that under this demonstration project, VA will pay significantly more for contract care without the safeguards of VA’s high quality standards. 

Impact on VA Facilities and Affiliates

VA has chosen to measure any impact Project HERO may have on VA facilities within the VISNs 8, 16, 20, and 23 and their academic affiliates by reporting on “VHA full-time equivalent employees in Project HERO VISNs” and the “volume of authorizations to academic affiliates.”  To date, we are waiting for data from VA in order to determine whether such reporting accurately measures whether or not important Departmental interests are preserved, such as sustaining a partnership with university affiliates, and that Project HERO complements rather than supplants the larger VHA system of care.

Conclusion

Mr. Chairman, as DAV testified before the full House Committee on Veterans’ Affairs in March 2006, VA’s unmanaged programs in purchased care were not only expensive and growing but were entirely discontinuous from VA’s excellent internal health care programs and were absent the numerous protections and safeguards that are the hallmarks of VA health care today. DAV believes that more proactive management of fee and contract services by VA can provide greater continuity of care for veterans, better clinical record-keeping, higher quality outcomes and reduced expense to the Department. 

The delegates to our most recent National Convention passed Resolution No. 232 to improve VA’s purchase care program.  Under this resolution, DAV urges Congress and the Administration to conduct strong oversight of the non-VA purchased care program to ensure service-connected disabled veterans are not encumbered in receiving non-VA care at VA’s expense.  Furthermore, the resolution urges VA to establish a non-VA purchased care coordination program that complements the capabilities and capacities of each VAMC and includes care and case management, non-VA quality of care and patient safety standards equal to or better than VA, timely claims processing, adequate reimbursement rates, health records management and centralized appointment scheduling.

VA has demonstrated through Project HERO its ability to deliver on the ideas we expressed previously and still now to improve VA contract care coordination:

1. Oversight of clinical care quality is provided by the contractors and care is delivered by fully licensed and credentialed providers and must meet VA-defined quality standards;
2. Coordination of care is performed by the contractors by communicating directly with the veteran and prospective provider;
3. Continuity of care is monitored by the contractors and VA as patients are directed back to the VA health care system for follow-up when appropriate; and
4. Clinical information necessary to provide the care under Project HERO is provided by VA to the contractors, and records of care are scanned by the contractors and sent to VA for annotation in its Computerized Patient Record System (CPRS)

Unfortunately, this list in not complete and thus our concerns remain.  Since this matter first emerged in the FY 2006 Congressional appropriations arena, it has remained a significant concern that Project HERO, as with all other non-VA purchased care programs, does not become a basis to downsize or to privatize VA health care.  To that end, DAV would like to express our appreciation for VA’s effort to address our concerns and those of the veteran community.  However, as indicated in our testimony, VA’s goals for the Project, while laudable, require greater specificity to include validated and comparable data.  The quarterly updates VA has provided to the veterans service organizations have been informative and DAV is working closely with VHA’s Chief Business Office to ensure these reports provide more consistent and meaningful data. 

As DAV continues its work to ensure Project HERO achieves the goals we have advocated, we encourage this Subcommittee to continue its oversight, which would help ensure this demonstration project will provide a model for contract care coordination.  This concludes DAV’s testimony and I would be pleased to address your questions, or those of other Subcommittee members.

[1] Department of Veterans Affairs, Veterans Health Administration Directive 2009-033, Resolving Adverse Credit History Reports for Veterans Receiving Late Payments for Purchased Non-VA Care, July 15, 2009.

[2]Joseph A. Williams, Jr., Acting Under Secretary for Operations and Management, VHA, testimony for hearing on “VA’s Contracts for Health Services” before the Senate Committee on Veterans’ Affairs, September 30, 2009.

[3] The Independent Budget for Fiscal Year 2010

[4] Department of Veterans Affairs Office of Inspector General, Audit of Veterans Health Administration’s Non-VA Outpatient Fee Care Program, August 3, 2009.

[5] Government Accountability Office, VA Health Care: Third-Party Collections Rising as VA Continues to Address Problems in Its Collections Operations, January 31, 2003.

[6] Government Accountability Office, VA Health Care: Preliminary Findings on VA’s Provision of Health Care Services to Women Veterans, July 14, 2009.

[7] Washington D, “Ambulatory Care Among Women Veterans: Access and Utilization,” VA Office of Research & Development, Health Services R&D Service, November 2008. 

[8] Elizabeth Yano, “Translating Research Into Practice—Redesigning VA Primary Care for Women Veterans,” PowerPoint Presentation, DAV National Convention, Las Vegas, NV, August 2008.

[9] Ibid.